SanDisk Call Rises to 93% Gain!

Our options portfolio lost a little ground last week as two options hit June expirations. Our June call option on Paragon Shipping expired out of the money. The company, in the international water transportation business, just never got its stock moving in the right direction. This is still a company with good potential; we were just too early in our expectation of a business recovery. HealthSpring made a modest recovery late in the week just in time prior to our call expiration. The call was exercised and we now hold the stock. We do not expect to hold the stock for long and will sell if we can get a near term bounce in the stock. Amerigroup (AGP, Healthcare Facilities) and Clearwater Paper (CLW, Paper Products) are currently on our buy list. We have written before about our interest in purchasing an AGP Dec call spread with exercise prices of $35 and $40. We would buy the $35 and sell the $40 for a net debit. The option is already in the money and we would have six months to realize additional price appreciation. Healthcare has been an underperformer the past six months, and we expect that to change providing additional lift to Amerigroup. Clearwater Paper is also on our buy list and we may look to play a similar option structure but with January 2011 expiration. Option premiums have declined from recent highs, but remain elevated. We may dip our toes back in the water and evaluate near term VIX short positions to cash in on elevated premiums. We remain very optimistic that our portfolio will bounce back sharply and finish the year much higher than the market averages. Over the longer term, this continues to be our best performing portfolio.

Portfolio Details Available Online At:
http://www.marketbeatingstocks.com